"One reason why I believe it is appropriate for the Federal Reserve to continue to provide substantial help to the labour market, without adding to the risks of inflation, is because of the evidence I see that there remains considerable slack in the economy and the labour market," Yellen said in prepared remarks for a speech in Chicago, Illinois.

"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policymakers at the Fed," Yellen said.

Yellen's comments eased concern sparked earlier this month when she suggested US interest rates might rise as early as the first half of 2015.

Shares of Walt Disney and Cisco led the gains in the Dow, up 1.3 percent and 1 percent respectively.

The latest clues on the US labour market will be offered in the form of the ADP employment report on Wednesday, followed by weekly jobless claims on Thursday and the government's monthly employment report on Friday.

"Everyone expects the Fed to remain accommodative, even after the asset purchases (have ended), and Yellen's comments echo this sentiment," Larry Milstein, managing director in New York of government-debt trading at R.W. Pressprich & Co, told Bloomberg News. "The market is waiting for Friday's employment data to give us direction."

In Europe, the Stoxx 600 Index finished the session 0.2 percent higher from the previous close. Germany's DAX and the UK's FTSE 100 both closed 0.3 percent lower. France's CAC 40 shed 0.5 percent as the socialist government sought to revamp itself in the wake of heavy municipal election losses on the weekend.

Separately, inflation in the euro zone eased more than expected to 0.5 percent in March, according to an initial estimate by the European Union's statistics office. European Central Bank policy makers are set to gather this Thursday and are expected to keep interest rates steady at a record low.

"This will keep the possibility of further monetary policy easing very much alive," Nick Kounis, head of economic research at ABN AMRO in Amsterdam, told Reuters. "Nevertheless, the central bank has shown quite some tolerance for low inflation recently."